Two German premium carmakers BMW and Mercedes-Benz are competing in Nepal as the government plans to procure seven high-end bullet proof cars for VVIPs for the upcoming South Asian Association for Regional Cooperation (SAARC) Summit.

The companies have intensified lobbying in Singha Durbar corridors with the cabinet on Monday endorsing the foreign ministry’s proposal to call global tenders for procuring the luxury cars.

The government will use these cars for plying seven foreign heads of state/government who will attend the Saarc Summit in Kathmandu possibly in November.

According to the ministry, each car will cost 50 million Nepalese rupee (US$515,570) after waiving all duties and customs. With all applicable taxes, each car would cost up to 100 million Nepalese rupee (US$1.3 million)

Sources at the finance ministry and foreign ministry said the carmakers are vying for a foothold in Nepali market through this Saarc deal. So far, BMW does not have an official dealer in Nepal while Mercedes, despite having a local dealer, has limited buyers.

Interestingly, both the ministries are divided over the choice of the brand. Sources say finance ministry favours Mercedes-Benz while the Foreign Ministry’s pick is BMW. A team from the BMW headquarters has approached government officials, offering a special price if the Nepali side decides to procure its products, said a knowledgeable source.

In a tender proposal tabled at the cabinet, the foreign ministry suggested procuring BMW for security reasons, a brand widely used by many heads of state that is an epitome of luxury known for premium facilities and a prestige symbol.

Meanwhile, finance ministry wants to procure Mercedes, arguing that the cars offer an easy ride, that several models of Benz cars ply the Kathmandu streets and that old kits are available to be fitted in case of any damage or technical glitches.

Chief secretary Leela Mani Poudyal has intervened arguing that specifying a brand in the tender document would be against the Public Procurement Act. “It is illegal and unethical to mention a particular brand in tender document as it means we favour one particular company. Let’s go for ones that offer a lower price,” Poudyal had suggested in the meeting.

As a result, the cabinet was ready to call global tender to procure from the lowest bidder. But only BMW and Mercedes-Benz provide high-end, premium bullet proof cars.

Officials were reluctant to procure cars in a direct deal fearing reprisals from the Commission for Investigation for Abuse of Authority given the huge sum of money that is involved in the process. The foreign ministry even mulled over seeking logistical donations from India and China.

Chief secretary Poudyal reportedly turned down the foreign ministry's proposal saying that it would be a matter of shame for the county to ask for cars to host such an important event.

Sources say there is strong push from the German brands to put other medium-rung cars and buses on the Nepali market using the Saarc Summit platform.

The government needs another 30 medium-rung cars for the spouses of the visiting dignitaries of the member states, and foreign ministers and leaders from nine observer nations.

Officials said they will be calling global bids for high-end cars shortly, followed by the other 30 vehicles.